Wednesday 7 December 2016

Customers' savings safe, but banking costs to rise

Charlie Weston Personal Finance Editor

Published 01/10/2010 | 05:00

CONSUMERS were assured yesterday that their savings in AIB, Anglo Irish Bank and Irish Nationwide are safe.

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But there remains concern about the increased cost of banking for customers after the State effectively took control of AIB.

Deposits in Irish banks and building societies are covered by a double-lock of guarantees, a spokeswoman for the Financial Regulator said.

Some consumers expressed concern after the Government said it must pour more money into AIB and building societies Irish Nationwide and EBS.

The first €100,000 of all deposits in Irish-regulated banks and building societies is guaranteed under the State deposit protection scheme.

The scheme covers €100,000 per person, per institution. The scheme has no end date, the regulator said.

The deposit guarantee covers AIB, Bank of Ireland, ICS Building Society, EBS Building Society, Anglo Irish, Irish Nationwide Building Society and Irish Life and Permanent. It also covers credit unions and Ulster Bank.

Most deposits are also covered by another guarantee, which has now been extended until the end of the year -- the Eligible Liabilities Guarantee Scheme.

This guarantees eligible deposits (of up to five years), which are placed on deposit before the end of the year. This scheme covers amounts of more than €100,000.

Covered under this scheme are AIB, Anglo Irish Bank, Bank of Ireland, EBS Building Society, ICS Building Society, Irish Life and Permanent and Irish Nationwide Building Society.

A spokeswoman for the regulator said: "Deposits in Irish banks are unaffected by the capital announcements and all depositors will continue to benefit from the deposit guarantees in place.

"Consumers are reminded that under the deposit guarantee scheme all deposits are covered to a maximum of €100,000 per person, per bank, indefinitely.

"Eligible deposits in Irish banks are fully guaranteed to the end of December 2010 under the Eligible Liability Guarantee."

Meanwhile, the bill for saving our banks is set to cost every man, woman and child in the State €10,000 each.

This is based on the total cost of the bailout hitting €44bn, but it could rise to €50bn. In that case, the cost for each citizen would rise to €12,000.

And yesterday, consumer groups predicted that the State's effective takeover of AIB, the need to put more funding into Anglo Irish and building societies Irish Nationwide and EBS, would mean branch closures and higher lending costs.

The failure of AIB to raise funds on the markets -- and the need for the State to pump more money into it -- means the banks will have to increase costs for consumers.

Consumers' Association vice-chairman Michael Kilcoyne said it was inevitable that AIB would be forced to shut branches as it attempts to return to profitability to escape state ownership.

The bank has 182 branches and 88 sub-branches, along with 15 business centres.

He said the bank would squeeze consumers by hitting them with higher lending costs and higher charges for banking transactions.

The bank has 7,284 people working in its branch network in Ireland and a total workforce of 12,500, a spokesman for AIB said yesterday.

Mr Kilcoyne said layoffs were highly likely. "There will be a big rationalisation at AIB," he said.

Director of the Irish Mortgage Corporation Frank Conway said consumers would lose out from the AIB nationalisation.

"The Government increasing its stake in AIB will mean less choice and more costs for consumers," he said.

Irish Independent

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